What is the difference (in ₹) between the simple interest and the compound interest on a sum of ₹8000 for $2 \frac{2}{5}$ years at the rate of 10% p.a., when the interest is compounded yearly?
Answer & explanation
Correct answer: option 1
Principal(P)=Rs 8000
Rate = 10 %
Time(T)= 2\(\frac{2}{5}\) years
Simple Interest(I)=\(\frac{P×R×T}{100}\)
S.I. = \(\frac{8000×12×10}{100×5}\) = 1920
Compound Interest = P (1+\(\frac{R}{100}\))t - P
C.I. = 8000 (1+\(\frac{10}{100}\))2×(1+\(\frac{4}{100}\)) -8000
C.I. = \(\frac{8000×11×11×26}{10×10×25}\) - 8000
C.I. = 10067.2 - 8000
C.I. = Rs 2067.2
Difference = C.I - S.I.
= 2067.2 - 1920
= Rs 147.2